Corf's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $9.500 per year and will cut annual operating costs by $0.300. The system will cost $50500 to purchase and install This system is expected to have a 5-year life and will be depreciated to zero using straight-ne depreciation and have no salvage value. The tex rate is 40 percent and the required return is 10.8 percent What is the NPV of purchasing the pressure cooker? O O O O O 121.047 -80335 $6603 -52630 1409
Q: Milton Industries expects free cash flows of $19 million each year. Milton's corporate tax rate is…
A: Given:ParticularsAmountFree cash flows$19MillionTax rate22%Unlevered cost of capital…
Q: PREFERRED STOCK-DIVIDEND The 8.0% $100-par, preferred stock is trading at $64.00. If the preferred…
A: The preference dividend is the type of payment that is paid to the preference shareholders who are…
Q: se the Present Value tables found in Appendix E, of your textbook, to answer the following…
A: Value of loan is the present value of payments done against the loan based on time value of money.
Q: PQ #1. The cost of capital for a firm which has no debt is called the A. Levered B. Unlevered C.…
A: Cost of Capital is that cost which is incurred by the company for using the capital of the company.…
Q: ABC Company and XYZ Company are identical firms in all respects except for their capital structure.…
A: Equity $ 5,75,000.00 $ 2,87,500.00Debt $ - $ 2,87,500.00EBIT $ 64,000.00 $…
Q: A company issues $20,000,000, 7.8%, 20-year bonds to yield an effective rate 8% on January 1, 2014.…
A: Bond Amortization refers to the payment of principal on a bond along with the interest to be paid on…
Q: The price of NetFlex stock is $54.54; its expected dividend next year is $6, and its constant annual…
A: Required rate of return is that which is minimum rate of return which investor wants to earned on…
Q: Assets Loans $ 1200 Securities 500 Non-earning 300 % 10% 5% 0% Liabilities $ Deposits Other Equity…
A: We need to calculate non interest income by adding the interest paid on liabilities and deducting…
Q: Use the following information to answer the question that follow: Net Income Profit margin A/R…
A: Days sales in receivables, also known as average collection period, is a financial metric that…
Q: how did you get .88496 in year 1? I input 1/1(1+13)^1 into excel and got a different answer.
A: We need to use present value formula to calculate value today of future payment.WherePV = present…
Q: You have just been offered a contract worth $1.01 million per year for 6 years. However, to take the…
A: The maximum capital investment that can be made for a project is the present value of all returns…
Q: On Monday 6 March, 2023 you purchase a $1,000 Treasury bond that matures on May 15, 2031 (settlement…
A: Dirty price of bond is the sum of clean price of bond and accrued interest on the date of…
Q: Common predatory mortgage lending practices include: (select all that apply) Question 4 options:…
A: Predatory mortgage lending practices are unethical tactics used by some lenders to exploit…
Q: 5. Problem 6.07 (Expectations Theory) B eBook One-year Treasury securities yield 3.65%. The market…
A: The pure expectations theory states that the expected future spot rates of interest are equal to the…
Q: The yield on a one-year Treasury security is 5.8400%, and the two-year Treasury security has a…
A: As per Q&A guidelines, The first question should be answered when multiple questions posted…
Q: You read in The Wall Street Journal that 30-day T-bills are currently yielding 4.8%. Your…
A: Yield on T-Bill = 4.8%Inflation premium = 3.5%Real risk-free rate= Yield on T-Bill - Inflation…
Q: Possible outcomes for three investment alternatives and their probabilities of occurrence are given…
A: Coefficient of variation can be solved by using the following formulaCoefficient of variation =…
Q: Suppose you invest 40% of your fund in stock A and the other 60% in stock B. If stock A and B are…
A: In the given case, we have provided the probability of each state of economy and the return of each…
Q: Discuss how the subprime mortgage crisis of 2007 was based upon the flawed financial model that…
A: The subprime mortgage crisis of 2007 was a significant financial event that had far-reaching…
Q: U.S. Treasury STRIPS, close of business February 15, 2019: Maturity Feb 2020 Feb 2021 94.770 Feb…
A: A STRIP, or Separate Trading of Registered Interest and Principal Securities, is a financial product…
Q: ct a two-stock portfolio using stock A and stock B. You invest $700 in stock A and $300 in stock B.…
A: Standard deviation is measure of the risk and volatility in rate of return of the stock over the…
Q: KatyDid Clothes has a $110 million (face value) 25-year bond issue selling for 102 percent of par…
A: The debt component here is a bond. To compute the cost of debt we will have to determine the YTM for…
Q: A $34, 223 simple interest note was dated August 14, and earned 14.79% exact interest for 78 days.…
A: Maturity value is that amount which includes the interest earned on the investment. It is that…
Q: You deposit $2,000 at the end of the year (k = 0) into an account that pays interest at a rate of 6%…
A: Here, Amount of Deposit today $ 2,000.00Interest Rate for 1 year 6%compounding…
Q: Consider the following financial information and answer the questions that follow: Sales Costs…
A: i)The EBIT for the year is The operating cash flow is
Q: Expected return-beta relationship E(rp) = % + Bp1 + Bp2
A: The expected return formula is as follows:Expected Return = Riskfree rate + Beta 1 x Risk premium of…
Q: 3.You are given the option of receiving a lump sum of $20,000 now or an annuity of $2000 per year…
A: An annuity is a financial instrument that provides a series of equal payments made at equal…
Q: Calculate the real dollar rate of return on a painting whose price rises from $150,000 to $200,000…
A: The inflation rate is a measure of the percentage change in the general price level of goods and…
Q: Dave borrowed $440 and paid $44 in interest when he repaid the principal after one year. The lender…
A: The effective cost of a loan refers to the total cost that a borrower will incur over the life of…
Q: Raiders Restaurant is considering the purchase of a $10,000,000 flat-top grill. The grill has an…
A: Book value of assets is that value which was shown in books of account. For the calculation of book…
Q: You make monthly deposits of $185.00 in an account that earns a return of 8.00%. How many years will…
A: The future value of an annuity is the total value of a series of regular, equal cash flows received…
Q: QUESTION 9 Abba, Inc is considering the purchase of some new equipment that costs $142,900. The new…
A: To calculate the payback period for the equipment purchase, we need to determine how long it takes…
Q: Scenario A car manufacturing company loses 40% of its market share and has a declining investment in…
A: The yield is the annual rate of return that an investor would get if they held the bond until…
Q: Your parents will retire in 27 years. They currently have $370,000 saved, and they think they will…
A: Retirement income refers to the funds and financial resources that an individual or household…
Q: You are considering making a movie. The movie is expected to cost $10.7 million up front and take a…
A: Payback period is the amount of time to recover the initial investment. The decision criteria to…
Q: A put provision gives the investor the right but not the obligation to sell the bond back to the…
A: Bonds usually have two types of provisions – put provisions and call provisions.In case of a put…
Q: (15. Samsung bond has been just issued under th e conditions: 10 years to maturity, coupon rate 7 %,…
A: Coupon bonds are debt securities that pay periodic interest payments, known as coupons, to the…
Q: rate of 8 percent invest in stocks with this degree of riskiness. The estimated value of Delta is?…
A: The constant growth model is a stock valuation method used in finance to determine a stock's…
Q: Select all that are true with respect to discount rates:
A: We can determine the cost of equity and WACC using the formula below:
Q: Millenium Pink’s 7.5% bonds were issued ten years ago, and they mature in exactly 10 years. They are…
A: A bond is a kind of debt security issued by the government and private companies to the public for…
Q: Paul deposited $600 at the end of every month into an RRSP for 8 years. The interest rate earned was…
A: The FV of an investment refers to the combined worth of the cash flows of the investment at a…
Q: Solo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0-$ 13,800 1…
A: It is the indication of the flow of money in and out of the organisation. Cash received helps in…
Q: 3. What is the present value of the following set of cash flows at an 8% discount rate compounded q…
A: Present value is computed by following formula:-PV = wherePV = Present value of Cash flowsA = Cash…
Q: Required: a. MF Corporation has an ROE of 15% and a plowback ratio of 40%. If the coming year's…
A: ROE=15%Plowback=40%EPS=$3Market capitalization=12%
Q: A year from now, the expected price of a stock is $178; the expected dividend is $3. The required…
A: Current price of stock is that price which can be paid for purchase of the stock. It is also called…
Q: Which one (1) of the following kinds of loss or damage is covered under the Condominium Unit Owners…
A: A Condominium Unit Owners Comprehensive Policy is an insurance policy bought by all units to protect…
Q: tsche Transport can lease a truck for four years at a cost of €32,000 annually. It can instead buy a…
A: Cost of buying=€82,000Salvage value after 4 years= €21,500Annual maintenance=€12,000Discount…
Q: lease submit solution step by step without using excel formulas
A: Price of a bond is the present value of coupon payments plus the present value of the par value of…
Q: the new value of the bond will be approximately
A: We can determine the new price of the bond using the formula below:Bond prices and yield have an…
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Expected return of stock fund = 22% Expected return of bond fund = 12%Risk-free rate= 5%Standard…
Step by step
Solved in 3 steps with 2 images
- Although the Chen Company’s milling machine is old, it is still in relatively good working order and would last for another 10 years. It is inefficient compared to modern standards, though, and so the company is considering replacing it. The new milling machine, at a cost of $110,000 delivered and installed, would also last for 10 years and would produce after-tax cash flows (labor savings and depreciation tax savings) of $19,000 per year. It would have zero salvage value at the end of its life. The project cost of capital is 10%, and its marginal tax rate is 25%. Should Chen buy the new machine?Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $7,900 per year and will cut annual operating costs by $14,000. The system will cost $48,300 to purchase and install. This system is expected to have a 6-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 11.5 percent. What is the NPV of purchasing the pressure cooker? Multiple Choice $30,900 -$5,834 ○ $4,909 о $34,134 -$20,096Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,800 per year and will cut annual operating costs by $14,900. The system will cost $51,000 to purchase and install. This system is expected to have a 7-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 35 percent and the required return is 12.4 percent. What is the NPV of purchasing the pressure cooker?
- Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $8,800 per year and will cut annual operating costs by $14,900.The system will cost $51,000 to purchase and install. This system is expected to have a 7 year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 12.4 percent. What is the NPV of purchasing the pressure cooker?Cori's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $18,600 per year and will have variable costs of $1,700 per year. Fixed costs are $950. The system will cost $50,400 to purchase and install. This system is expected to have a 5-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent. Please provide a pro forma financial statement to Cash Flows from Operations for the life of the pressure cooker. PLEASE ANSWER THIS QUESTION IN EXCEL FORMULA, NOT ALGEBRAICALLY!AAA Shop is considering a project to improve their production efficiency. They are trying to decide whether it is a good idea or not to buy an automated injection molding machine which will result in reducing pre-tax costs by $500,000 for each of the next three years. The molding machine will cost $1,000,000 and the IRS says it must be depreciated as 3 year MACRS equipment. AAA Shop believes they can sell the machine for $80,000 at the end of three years. The molding machine will require an initial investment to increase inventoru by $34,000, and then an additional inventory increase of $3,000 for each succeeding year of the project. AAA's tax rate is 35% and uses a discount rate of 14%. AAA already spent $5,000 investigating the feasibility of using the machine. Please show your detailed work so that the NPV of the project is $52,215.89. What is the $5000 that AAA already spent investigating the feasibility of using the machine? What is the change in networking capital at the end of…
- Martin Tartans Inc. is considering the purchase of a new argyle sock knitting machine to replace a less automated one. The new machine will cost $220,000 plus $30,000 for shipping and installation. The machine being replaced was purchased five years ago for $140,000 and depreciated as a 7-year MACRS property. It can be sold for $24,000. Martin has a marginal tax rate of 35%. Compute the NINV for the project. Use the rounded MACRS schedule listed below: (7-Year Depreciation Schedule: 14%, 25%, 18%, 12%, 9%, 9%, 9%, 4%)Cor's Dog House is considering the installation of a new computerized pressure cooker for hot dogs. The cooker will increase sales by $10,100 per year and will cut annual operating costs by $11,750. The new system will also prompt a $4,900 increase in net working capital. The system will cost $60,200 to purchase and install. This system is expected to have a 4-year life and will be depreciated to zero using straight-line depreciation and have no salvage value. The tax rate is 21 percent and the required return is 10.5 percent. What is the NPV of purchasing the pressure cooker? OCF = $ CFO = S CF4=$ NPV = It It It It It 11 11DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life. If DeYoung doesn't replace the old machine, it will have no salvage value at the end of its useful life. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total,…
- DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life. If DeYoung doesn't replace the old machine, it will have no salvage value at the end of its useful life. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total,…DeYoung Entertainment Enterprises is considering replacing the latex molding machine it uses to fabricate rubber chickens with a newer, more efficient model. The old machine has a book value of $450,000 and a remaining useful life of 5 years. The current machine would be worn out and worthless in 5 years, but DeYoung can sell it now to a Halloween mask manufacturer for $135,000. The old machine is being depreciated by $90,000 per year for each year of its remaining life. If DeYoung doesn't replace the old machine, it will have no salvage value at the end of its useful life. The new machine has a purchase price of $775,000, an estimated useful life and MACRS class life of 5 years, and an estimated salvage value of $105,000. The applicable depreciation rates are 20.00%, 32.00%, 19.20%, 11.52%, 11.52%, and 5.76%. Being highly efficient, it is expected to economize on electric power usage, labor, and repair costs, and, most importantly, to reduce the number of defective chickens. In total,…The owner of Atlantic City Confectionary is considering the purchase of a new semiautomatic candy machine. The machine will cost $25,000 and last 10 years. The machine is expected to have no salvage value at the end of its useful life. The owner projects that the new candy machine will generate $4,000 in after-tax savings each year during its life (including the depreciation tax shield). Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: Compute the profitability index on the proposed candy machine, assuming an after-tax hurdle rate of: (a) 8 percent, (b) 10 percent, and (c) 12 percent. (Round your final answers to 2 decimal places.)
